Woolworths Metro the ‘final nail in the coffin’ for small businesses struggling to compete

Small businesses are already being squeezed in Sydney after the launch of a new Woolworths, targeting local lunch spots with new tactics.

Woolworths’ new convenience store-style shop in Sydney’s inner-north has only been open two days but already competitors are feeling the squeeze.

The owner of the fruit shop next to the new Woolworths Metro in Kirribilli says he has already cancelled his lease, while the owner of the convenience store across the road has begun consolidating his external florist to within the main store.

The modern Woolies store opened on Wednesday selling ready-made meals and barista-made coffee, and is part of the major supermarket’s play to occupy high-density areas in Australia’s largest cities.

But its broad range of offerings has local shops and cafes worried they’ll be unable to keep up with the lower prices on offer.

Nick Economidis says he can't compete with the ‘big boys’ and has cancelled his lease.

“I didn’t sign the renewal of my lease because we can’t afford to play against these big boys,” Kirribilli House of Fruit owner Nick Economidis told News.com.au.

Mr Economidis said locals have promised to keep supporting him and other independent businesses but he knows the cheaper pricing will win in the long run.

There have been many smaller stores open in the area over the years but he said “this is the final nail in my coffin”.

“You just can’t beat these big boys,” Mr Economidis said.

“And once there’s no more competition, they’ll do what they want with the prices.”

The modern style Woolworths Metro opened in Kirribilli on Wednesday.

The Milson Point Supermarket owner says he’s been forced to retreat his florist

into the main store in a desperate bid to cut costs.

“It’s very hard, life’s hard for the small businesses,” said Tom, who didn’t want to give his last name.

And Bakery on Burton manager Raz Shreshtha said the broad-ranging Woolworths Metro will affect every business in the close-knit community.

“We’re already facing parking problems now and it’s still holidays, when people are back it’s going to be a really big problem,” Mr Shreshtha told News.com.au.

Woolworths is particularly good at modifying store formats to cater to the habits of targeted customers, says Queensland University of Technology retail expert Gary Mortimer.

“The new generation store they have at Marrickville probably wouldn’t work in other suburbs, but the store we’re now seeing in Neutral Bay and this new store that’s just opened (Kirribilli) might not work in say Penrith where shoppers in those suburbs are looking at low price,” Dr Mortimer said.

The new Woolworths Metro in Kirribilli is selling barista-made coffee.

Dr Mortimer said we should expect more of these smaller modern stores from both Woolworths and Coles as the proportion of Australians living in medium to high-density housing grows.

“We have thousands and thousands of consumers living in the range of the CBD and that land is very expensive to get a full supermarket into,” he said.

“Smaller format metro-style stores work really well and people who tend to live in those high-density urbanised areas tend to shop more frequently but buy fewer products.”

The supermarket giant said its research revealed residents in the area were keen on the prospect of salads and other ready-made meals to go.

“We know customers are increasingly looking for quality fresh food options at affordable prices in convenient locations and Woolworths Metro Kirribilli is designed to meet these needs,” Woolworths Metro general manager Justin Nolan said.

“Catering for busy city workers, Milson Point train commuters, tourists visiting the area and local residents looking for quick and easy ‘grab and go’ shopping options, the new Woolworths Metro offers a curated and contemporary range.”